A new analysis by the Institute for Fiscal Studies (IFS), says government’s 2026 Mid-Year Budget Review presented to Parliament on July 23, 2026, raises serious concerns about budget credibility despite some positive macroeconomic signals.
According to IFS, while inflation remained relatively low at 5.3% in June and interest rates continued to fall — with the 91-day T-bill dropping to 5.7% and average lending rates to 15.6% — the budget’s implementation in the first half of the year was weak.
The report found that total expenditure including arrears payment fell short by GHC35.60 billion, or 20.6 per cent, against a budget target of GHC172.54 billion. Capital expenditure missed its target by GHC14.38 billion, 39.3 per cent, while arrears clearance fell short by GHC8.64 billion, 61.8 per cent.
IFS warns that the underspending is dragging growth, with non-oil real GDP growth slowing to 6.3 per cent in Q1 2026 from 7.1 per cent in Q4 2025.
The think tank attributes the gap largely to a GHC34.45 billion shortfall in domestic financing, even as GHC15.6 billion was accumulated in the Sinking Fund by July 22, 2026.
Unrealistic targets and data gaps
IFS also faults government for keeping the 2026 revenue-to-GDP target at 16.8 per cent and real GDP growth at 4.8 per cent, despite 2025 growth hitting 6.0 per cent and Q1 2026 hitting 6.4 per cent. It says the revenue ratio target is “unrealistically high” and has consistently been missed since 2015.
The analysis further highlights data inconsistencies in the budget appendices, including a GHC712.43 million unexplained difference in revenue targets, and notes the absence of any strategy to mobilize revenue from small-scale gold mining, which accounted for 51.5 per cent of gold exports in 2025, but yielded no royalties.
IFS is calling for improved budget execution, evidence-based forecasting, a clear revenue strategy for small-scale mining, and stronger data validation to restore confidence in the budget.
The group however welcomed the decision to extend the Ministry of Finance’s Commitment Authorisation System to State-Owned Enterprises to help check arrears accumulation.
Eben Agyekum-Boateng, 3Business
